Thuringia Faces Financial Crisis Amidst Extended Credit Repayment Plan
Thuringia’s Finance Minister Katja Wolf (BSW) has issued a dire warning, describing the state as being in an "extremely difficult financial situation." Attempts to alleviate the strain include a proposal to extend the repayment period for COVID-19 relief loans from 15 to 30 years, a move that could free up tens of millions of euros annually.
Despite this measure, Minister Wolf emphasizes that it will not suffice to fund the ambitious projects envisioned by the "Raspberry Coalition" comprised of the CDU, BSW, and SPD. She maintains that the budget must include an additional 100 million euros to cover underestimated expenses stemming from wage increases in the public sector.
"Without this adjustment, we will be unable to hire teachers or police officers after August," Wolf explains. Furthermore, funding is required for the announced detention centers for deportees to be built in Arnstadt, with an initial allocation of one million euros for this year. Wolf also highlights the need to improve the state’s financial support to municipalities and expresses her hope for cooperation from parliamentary factions in this regard.
The next phase of budget negotiations for 2025 will commence next week, with the three governing factions holding a retreat. Numerous proposals are anticipated, aimed at revising the draft budget submitted by the previous Red-Red-Green coalition, which proposed a budget of 13.75 billion euros.
Minister Wolf anticipates minimal increases in overall expenditure, emphasizing that only essential items like personnel costs can be accommodated.
The Raspberry Coalition faces a dilemma, as the Red-Red-Green government intended to deplete all of the state’s reserves to fund the 2025 budget. However, the CDU, BSW, and SPD oppose this approach, seeking to preserve around half a billion euros in the reserve.
This decision significantly limits the financial flexibility of the three parties. Minister Wolf warns that the planned double budget for 2026/27 could result in a deficit of up to 2.7 billion euros, further exacerbating the financial crisis.
Key Points:
- Thuringia faces a severe financial crisis, according to Finance Minister Katja Wolf.
- A proposal has been made to extend the repayment period for COVID-19 relief loans from 15 to 30 years to ease the financial burden.
- Additional funds are required to cover underestimated expenses in the public sector due to wage increases.
- Funding is necessary for planned detention centers for deportees and improved financial support for municipalities.
- The Raspberry Coalition faces challenges in revising the draft budget inherited from the previous government while adhering to its own policy objectives.
- The double budget for 2026/27 could lead to a significant deficit, further compounding the financial situation.
